Employment at Will: The Most Misunderstood Principle in the Workplace

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By John A. Gallagher

Most Americans have a general understanding of the “Employment at Will” doctrine.

They understand that it means that they are not guaranteed employment for any specific period of time. In general, and at least intellectually, they understand that they can be fired at any time, and for any reason.

However, it is my experience that folks do not know what that overriding principle, that one can be fired at any time and for any reason, truly means and how it plays out in the workplace.

Unions were created to fight the Employment at Will rule

In the United States, it was decided long ago by the courts that employment disputes would not be a matter for litigation in the courts. Thus, until unions came into vogue in the 1940s, employees in general had no protection against being terminated for any reason whatsoever. Indeed, employees had no right to any terms and conditions of employment.

When unions came about, the process of negotiating collectively on behalf of a group of employees insured, at least for unionized companies, that employees could not be terminated unless there was a good reason. Thus, if you are member of a union, you generally cannot be terminated unless there is “good cause” for the termination, and unless the company first goes through a progressive set of disciplinary actions.

That’s not true for the rest of us.

The rest of America — the non-unionized portion of America — remained without any protection (unless they fell into the rare category of employees who have a contract for a specified period of time, which in many cases is limited to sports figures and top-level executives).

Gold watches are a thing of the past

For many years, there was an unwritten contract between American companies and their employees.

This contract said that if you came to work every day, did a good job, were productive and respectful and loyal to the company, then the company in turn would be loyal to you and would not terminate you unless there was good reason to do so. Generations of American workers came to rely upon this unwritten principle, and many a long-time employee received a “gold watch” for their years of service.

Title VII enacted to protect women and minorities

As African-Americans and women began to enter the workforce in greater numbers in the 1960s, certain changes became apparent. These two groups were commonly excluded from employment opportunities, including hiring and promotion practices.

Although this practice of exclusion pre-existed the 1960s, and particularly where Italian-Americans and Irish-Americans were concerned, it had in many respects been remedied by the union movement. However, the unionization of women and African-Americans workers was a rare phenomenon, and in many respects, was limited to the education profession.

In 1964, the Civil Rights statute was enacted. This is commonly known as Title VII. It initially prohibited discrimination in the workplace based upon sex, race, national origin or religion. For many years, it’s most common application was to combat sexual harassment.

Protections for other categories of workers

Since then, Title VII has been expanded and supplemented by laws such as the Pregnancy Discrimination Act, the Americans With Disabilities Act, and the Age Discrimination in Employment Act.

Another law, the Family and Medical Leave Act (FMLA), was enacted in 1993 and prohibits retaliation against employees who need to take leave from work due to their own serious health condition, or in order to care for a family member with a serious health condition.

From time to time, other federal laws have been enacted in an effort to eliminate retaliation against employees who have asserted certain employment-related rights. For example, the Fair Labor Standards Act (FLSA), which guarantees employees a minimum wage and overtime, prohibits termination of employees who make complaints that they are not being compensated fairly under that law.

In most states, only employees of the government are protected against being terminated because they made a complaint that their governmental employer was engaging in unlawful activities.

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For employees of publicly-traded companies, Sarbanes-Oxley provides some protection against retaliatory discharge provided certain stringent requirements are met.

Common Law protects employees in workers’ comp claims

Meanwhile, over the past 40 years, many states have developed a body of law created by the courts that prohibits unlawful employment action based on a few, very limited, circumstances, the most common of which is the prohibition of retaliation against someone who has filed a workers’ compensation claim. This body of law has been deemed the law of “wrongful termination.”

While it has a very limited applicability in most states, it is the phrase that employees most commonly utilized when they believed they had been terminated for unfair reasons.

However, it is rare for an employee to actually have a wrongful termination claim, at least in Pennsylvania (where I practice) and most states. That is because, in the vast majority of cases, employees are terminated for reasons which, despite their unfair nature, are nevertheless lawful.

The scope of protections against unfair termination

And so, as it stands today, employees who are not in a union (or who don’t have long-term contracts) may be treated poorly at work, and may be terminated for any reason, unless:

  1. The termination is because of their sex, race, religion, national origin, age, pregnancy or disability;
  2. The termination is a retaliatory response to a complaint by an employee that he/she is being sexually harassed, or treated differently at work because of his/her sex, race, religion, etc.;
  3. The termination is a retaliatory response to an employee who has asserted their rights to leave under FMLA, or is made a claim for overtime under FLSA;
  4. The termination is a retaliatory response to the employee’s filing of a workers’ compensation claim.

While there are some other exceptions in any given state, and while governmental employees are protected under whistleblower laws, these really are the core laws and principles that govern the average American worker.

No rule that one must be treated fairly, decently at work

In many respects, the laws discussed above constitute the exception, not the rule, at least where employee complaints relating to termination are concerned. That is to say, for every telephone call I get from someone who has a legitimate claim for discrimination or retaliation under one of the principles discussed above, I get 20 calls from employees who feel that their termination was unfair for reasons having nothing to do with their age, sex, assertion of rights under FMLA, etc.

Many courts are fond of saying that there is no “civility code” governing the workplace. I supplement that by telling callers that there are no civil police in the United States. If a person is being subjected to mistreatment in the workplace, and assuming the mistreatment is not because all illegal motivations such as described above, then their only choice is to work it out or seek other employment.

For employees who are “merely” fired for unfair or incorrect reasons, the principle of “wrongful termination” does not apply. Rather, the only source of relief for such employees is through the unemployment compensation process.

This was also published on attorney John A. Gallagher’s Employment Law 101 blog.

John A. Gallagher, Esquire, is the president of the Gallagher Law Group, P.C., a Philadelphia-area law firm concentrating its practice almost exclusively on representing individuals with workplace issues. After 15 years of representing major corporations in employment litigation, John Gallagher opened his firm in 2006, and since that time has represented only employees. Contact him at jag@johnagallagher.com.

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1 Comment on “Employment at Will: The Most Misunderstood Principle in the Workplace

  1. Great piece.  There are two states that the employment relationship is governed by the good faith and fair dealing doctrine – notably California and Montana.  Adds a little more protection..

    The Montana Wrongful Discharge from Employment Act (WDA, MCA 39-2-901, et seq.) was adopted by the Montana Legislature in 1987, and is effective to all discharges in Montana occurring after July 1, 1987. The Act was in a direct response to the concern for large jury awards for compensatory damages and punitive damages, i.e. Gates v. Life of Montana Insurance Co., 196 Mont. 178, 638 P.2d 1063 (1982); Crenshaw v. Bozeman Deaconess Hospital, 213 Mont. 488, 693 P.2d 487 (1984); Flanigan v. Prudential Federal Savings & Loan Assoc., 221 Mont. 419, 720 P.2d 257 (1986). Although historically and legally the employment relationship in Montana was considered at will, the Montana Supreme Court adopted the theory of the implied covenant of good faith and fair dealing which it implied in an at will employment relationship. The Montana court treated the traditional at will employee relationship as an at will contract and held that it, like other contracts, had implied in it the covenant of good faith and fair dealing. Montana had implied such a covenant in other contractual situations, namely Nicholson v. United Pacific, involving a breach of lease situation. The concern from the employer’s viewpoint was that there were no specific guidelines or standards to determine what constituted a breach of the implied covenant of good faith and fair dealing other than “the justifiable expectation of the parties” allowing juries vast discretion to determine if there was a breach of the obligation of good faith and if so, to award compensatory and punitive damages.

  2. Great information!
    I personally find it indecent that right to be treated respectfully is is not considered mandatory. I guess it shows again that the at-will legislation is in need of an overhaul/update.
    Perhaps it was a given in the mid 1800s that families would instil respect for others to their children? Is that assumption there today? What motivates the at will?How does the at-will impact the population given that companies are outsourcing? And again, why are people asked reasons for separation on applications; wouldn’t it be a standard answer such as, “separation happened as a consequence of enforcement of at will right”?

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